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Britain to oppose IMF loan to Sri Lanka over plight of Tamil refugees

[Times Online UK, Saturday, 25 July 2009 11:59 No Comment]

Britain was poised tonight to take an unprecedented stand against a US $2.5 billion loan being extended by the International Monetary Fund (IMF) to Sri Lanka because of fears over the humanitarian situation in the county.

A British Government source said that that it was “not the right time to go forward” with the loan, because Sri Lanka is forcibly detaining nearly 300,000 mostly Tamil refugees in internment camps and spending a large proportion of its wealth on its military – even though the country’s bloody 26-year civil war ended in May.

The source said: “The current situation on the ground means that we do not believe that an IMF programme is appropriate, or could be delivered effectively.”

The United States, France and Germany were also thought to have serious misgivings about the loan, which is needed by Sri Lanka to stave off a looming balance of payments crisis and for the reconstruction of former warzones. The country’s finances have been battered by the global credit crisis and high military spending.

Dominique Strauss-Kahn, the IMF managing director, said this week that the lender had agreed preliminary terms with the Sri Lankan Government after four months of talks. The $2.5 billion agreed is $600 million more than Sri Lanka originally asked for.

Today, the Sri Lankan government itself was confident it would receive the funds.

“We have no problem obtaining the loan, I believe,” Anura Priyadarshana Yapa, minister of enterprise development and investment promotion, said.

“There will be a successful conclusion at the meeting…Now is the time for (the IMF) to support us because now we have completely destroyed one of the worst terrorist outfits in the world and it is time to start the reconciling and healing process in our country.”

The move came two months after the Sri Lankan Army crushed the Tamil Tiger terrorist organisation, ending a 26-year civil war that claimed at least 70,000 lives.

The loan was being discussed by the executive board of the IMF in Washington tonight, which was due to vote on whether to approve it when the discussion ended. Britain holds 5 per cent of the votes on the board and would have to have the support of several countries to block the loan, which needs 51 per cent of the votes to pass. The US, the largest IMF donor, holds 17 per cent of the votes; Germany 6 per cent and France 5 per cent.

The loan had already been delayed after the US and Britain sought to leverage the IMF money in a failed attempt to force a Sri Lankan Army ceasefire in May, to allow hundreds of thousands of civilians to escape the battle zone during the conflict’s brutal climax.

The British Government still believes the loan should not be approved, a stance that British officials said is unprecedented because it indicates that humanitarian concerns should be taken into account by the IMF, which has traditionally only factored in economic arguments.

The last time Britain abstained from an IMF vote was in 2004, on Argentina, when it did so purely on technical grounds.

Rights groups say that the internment camps set up by the Sri Lanka Government – which it calls “welfare villages” and are holding nearly 300,000 people – break international laws. Testimonies smuggled out of the camps have reported shortages of water and medical supplies.

A Human Rights Watch spokesman said: “The government continues to hold displaced persons in detention camps in violation of their rights to liberty and freedom of movement, limiting their ability to communicate and talk to others about what happened in the final stages of the war.

“It prohibits aid agencies from speaking out about poor conditions in the camps and expels critics. Persons suspected of having LTTE ties have been detained incommunicado, contrary to international law, and credible reports indicate that at least some have been mistreated.”

[Full Coverage]

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